Amazon Offering Ad-Supported Kindle 3G, Sponsored by ATandT

Amazon is offering an ad-supported Kindle 3G for $139, with corporate sponsorship by AT&T.

Amazon is
offering an ad-supported Kindle 3G for $139, a move that might kick off a new
round of e-reader price reductions. The device comes with corporate sponsorship
in the form of AT&T.
"A big thank
you to AT&T for helping to make the new $139 price possible," Amazon CEO
Jeff Bezos wrote in a July 13 statement.

Amazon also offers
a WiFi-only, ad-supported Kindle for $114. The devices include sponsored
screensavers; early sponsors included Buick, Chase, Olay and Visa. Although
Amazon likes to keep mum on actual Kindle sales numbers-a long-running company
habit-the Kindle with Special Offers' prominent position on the retailer's
bestseller list suggests that people are willing to sit through ads in exchange
for a lower price.

Although the
Kindle continues to dominate the e-reader market, it faces significant
competition on a number of fronts. E-book applications for the iPad and Google
Android have threatened to make tablets and smartphones, by virtue of their
multitasking capabilities, a more attractive option for consumers. Barnes &
Noble, meanwhile, continues to push forward with updates to its Nook e-reader
franchise. And Amazon's own Kindle application for PCs and mobile devices could
cannibalize the hunger for a dedicated Kindle device, at least in theory.
Even as Amazon
expands its Kindle franchise, rumors abound that the company will begin
building an Android tablet. Such a device would tackle Apple's iPad head-on.
"Amazon could
create a compelling Android- or Linux-based tablet offering easy access to
Amazon's storefront ... and unique Amazon features like one-click purchasing, Amazon
Prime service and its recommendation engine," Forrester analyst Sarah Rotman
Epps wrote in a March blog posting, soon after the first rumors of such a
tablet began to emerge. "More consumers considering buying a tablet say that
they would consider Amazon (24 percent) than Motorola (18 percent)."

In May, Piper
Jaffray analyst Gene Munster said he believed Amazon could sell 2.4 million
Android tablets in 2012, following a late 2011 launch in time for the holidays.
A few weeks later, during a June 7 Amazon shareholders meeting, Bezos told the
audience he was excited about tablets' potential for his company's business.
"Most of our
customers shop with us from desktop or laptop computers, but people have a
different posture with tablets," he said, according to a report published by GeekWire. With tablets, they "lean back on their
sofa. People leaning back on their sofa, buying things from Amazon, is another
tailwind for our business, so I'm very excited about that."
However,
Amazon remains tight-lipped about its actual tablet plans.
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Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.